Subsea Resources Share Discussion Threads

[tanazuk] 08/10/2007 06:43

MONIS, I have not had sight of it and was interested if someone had.

[monis] 08/10/2007 06:34

tan - what did it say?

[tanazuk] 07/10/2007 20:43

Anyone had sight of the Sunday Express mention of Amec being a potential bidder for Subsea?

[alby220] 03/10/2007 15:08

There is also a small article about SUB in the free distribution london paper.

[monis] 03/10/2007 13:14

Article in today's telegraph about SUB.

My own opinion, one shouldn't underestimate RAB they've recently pulled off a large deal with Falklands Oil and Gas with a major, admitedly it's a different field but these people have serious contacts and if they think there is a future for SUB they'll pull it off. IMHO.

[gengulphus] 03/10/2007 11:15

Significant extra buying by RAB is not very likely IMHO - and if they do, we'll soon know about it, because they'll be obliged to bid as soon as they go over 30% (after their purchases last Wednesday, they were on 29.74%).

Gengulphus

[monis] 02/10/2007 21:11

Large trades towards the end of play today. RAB possibly still buying by the looks of it.

[jfishy] 02/10/2007 14:10

Blackperl & Gengulphus - spot on, thanks for that.

[jfishy] 02/10/2007 14:09

So how much is the Wreck Database worth? Is it an asset?

From the chairmans statement:

Ella's salvage was not started; indeed in February 2007 the Board announced it "now believes that the wreck located has not definitively been proven to be the
Ella. Further work, including a further survey visit to the site of the wreck,
would need to be carried out to definitively conclude the wreck is indeed the
Ella". As noted below under Operations for the period 1 April to 24 September
2007 we have failed to find Miranda in this Summer season. As referred to below
under Planned operations for Winter 2007/08 the Board is currently considering
whether to begin the search for Vanilla during Winter 2007/08.

I've never held much store in the value of the shipwreck database. I'm sure Lloyds could easily come up with something significantly better.

Also, this wonderful DB seems to be lacking somewhat:
- Ella - not proven to be Ella.
- Miranda - didn't show up.
- Vanilla - I'm reading into this, does it mean "We aren't convinced we'll find this one either"

My value for the wreck DB is zero.
Just because a director put 20 years research into it doesn't mean it was a worthwhile effort...

[euanmebabe] 02/10/2007 11:49

This is going to end the day down at this rate. Just hope that there is a decent offer announced in the end. Anything is possible with AIM but logic would suggest that any offer would have to be enough to satisfy the big shareholders and would thus have to be a fair bit above the current 1.25:1.75p level.

[monis] 02/10/2007 09:42

There was a case (i saw it on the news recentlty) of an American company which actually salvaged a shedload of gold. Perhaps there is the possibility of a tie up with a company like the American one which has a track record of actually getting the stuff up and out of the water. I'm sure the 12,000 vessels which SUB has on its books would be of interest to a company who can actually do the salvaging.

Perhaps RAB or the this director knows this company, I'm sure salvaging must be a small world.

[gengulphus] 02/10/2007 09:35

No idea. All I'm clear about is (a) it's not a simple asset stripper's share; (b) based on what I can actually see about the company, it's too risky for me. If others can see reasons why they want to buy the shares, good luck to them - but I don't buy shares on the basis of other people's purchases, only if I can see reasons to buy myself. And in this case, I can't.

Gengulphus

[monis] 02/10/2007 09:28

Geng- very interesting.

Why do you think this director is still buying?

Why are RAB still buying?

Any thoughts?

[gengulphus] 02/10/2007 09:18

1.75p?!

Do they think they can asset strip the thing and reverse another resources company into the quote, I wonder.

Not at 1.75p, no. There may be potential for an asset stripper, but it's at a much lower price than that.

To see this, first look at the asset position on March 31st, from the preliminary results. They give a net asset figure of £1.92m. But from the point of view of an asset stripper, that's overstated: the £5m of bond debt appears on the balance sheet as £3.53m of non-current liabilities, yet the bondholders are clearly entitled to £5m back when their bonds mature. (The explanation of this is in note 14 of the accounts - basically, the bonds are accompanied by options, and the company is valuing part of the proceeds of the bonds as payment for the options - i.e. as equity rather than a liability. To make the liability come out as the right amount on the bonds' maturity dates, the liability will be grown at a high rate of interest. That might be a reasonable accounting treatment for an acquirer who wants the company in order to operate it long term, it certainly isn't from the more short-term viewpoint of an asset stripper.)

So an asset stripper's view of the net assets of the company is likely to increase the long-term liabilities from £3.53m to £5m, decreasing the net assets on March 31st to £1.92m-(£5m-£3.53m) = £0.45m.

Now look at the effects of the placing in June/July. That added £4.36m before expenses and took the number of shares in issue up to 355.6m. If nothing else had happened, that would increase the net assets to £0.45m+£4.36m = £4.81m, or about 1.35p per share.

But that's clearly too high, because of the expenses of the placing, and because the company has been running for another six months since March without (so far as I can see) any money coming in from operations. Even if they've cut the running costs of the company drastically from last year, that's going to cost another couple of million, but I'd put it rather higher, given that they said in the results that in the absence of a project farm-in (i.e. of any more money coming in), they'll need more funding before the end of this calendar year.

The net result is that I'd say net assets are currently clearly less than 1p per share, and quite possibly as low as 0.5p per share. Since an asset stripper will be in it to make a profit, I would expect an asset stripper to be willing to pay even less than that.

So I'm pretty certain that an asset stripper wouldn't be willing to pay more than a smallish fraction of a penny per share. Maybe someone else would, if for example they particularly valued Subsea's information about old wrecks (we can dream of Russian billionaires who want to hunt treasure, for example, the same way that others want to own football clubs). But not an asset stripper.

Before anyone asks: I have no position in this share - I did, but I gritted my teeth and took a hefty loss quite a while back. I've kept an eye on it since, partly out of curiosity and partly in case the falls became overdone at some stage. This post is the result of another check about the latter. What I've seen tells me that I would find the share too risky even at 0.1p... In short, no position and that's very unlikely to change now.

I'll continue to watch what happens, but it's purely out of curiosity now.

Gengulphus

[monis] 02/10/2007 08:56

Surely RAB must have some big plans for SUB for the reason that their average price holding must be closer to 10p rather than todays levels, so rather than write it off they have decided to move it forward and get their money back and make some on top. Then there is this director who has also recently accumulated whose average share price must also be in the 8-10p range, so he also must have inforamtion to suggest that there is legs in this co.

Also to top it they were happy to pay 3p in an institutional placing in June when all the figures would have been available.

Interesting.

[william47] 02/10/2007 07:52

in your dreams oh wet one

[hectorp] 02/10/2007 07:45

Edmund you did well if you added a couple of days back.
H.

[william47] 02/10/2007 07:44

i thought so but ill be wrong.next one is DEBT a take-out price of 35p will do me.